General Electric’s (GE) CEO Jeffrey Immelt on Q3 2014 Results – Earnings Call Transcript

General Electric Company (NYSE:GE)

Q3 2014 Earnings Conference Call

October 17, 2014 8:30 a.m. ET

Executives

Matthew Cribbins – Vice President, Investor Communications

Jeffrey Immelt – Chairman and Chief Executive Officer

Kieran Murphy – Vice President, GE Healthcare Life Sciences

Jeffrey Bornstein – Senior Vice President and Chief Financial Officer

Analysts

Scott Davis – Barclays Capital

Nigel Coe – Morgan Stanley

Steven Winoker – Sanford Bernstein

Steve Tusa – JPMorgan

Deane Dray – Citigroup

Jeff Sprague – Vertical Research Partners

John Inch – Deutsche Bank

Andrew Obin – Bank of America Merrill Lynch

Operator

Good day ladies and gentlemen, and welcome to the General Electric Third Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is Vivian and I will be your conference coordinator today. (Operator instructions) As a reminder this conference is being recorded.

I would now like to turn the program over to your host for today’s conference, Matt Cribbins, Vice President of Investor Communications. Please proceed.

Matthew Cribbins – Vice President, Investor Communications

Great, thank you. Good morning, and welcome, everyone. We are pleased to host today’s third quarter webcast. Regarding the materials for this webcast, we issued the press release presentation and GE Supplemental earlier this morning on our website at www.ge.com/investor. As always, elements of this presentation are forward-looking and are based on our best view of the world and our businesses as we see them today. Those elements can change as the world changes. Please interpret them in that light.

For today’s webcast, we have our Chairman and CEO, Jeff Immelt; our Senior Vice President and CFO, Jeff Bornstein, and our Vice President, GE Healthcare Life Sciences, Kieran Murphy. We’ve asked Kieran to join to talk about our life sciences business.

Now with that, I’d like to turn it over to our Chairman and CEO, Jeff Immelt.

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Jeffrey Immelt – Chairman and Chief Executive Officer

Thanks, Matt. We continue to plan against the global macro backdrop to this volatile and one where some economic projections of recent been revised downwards. That said, we are seeing solid pockets of underlying growth in many of our markets. The good news for us is that we plan for volatile environment, our businesses are executing well, and we are tracking to our expectations for the year.

As a result, we had a good quarter. EPS was $0.38, an increase of 6% versus last year. Our Industrial segment profits grew by 9%. Our relative position in key markets is improving. We’ve gained share in transportation, aviation, power and healthcare. We had great new products.

Orders grew by 22%. For the first time in a while we are seeing volume improving for GE Capital in the US. GE grew margins by 90 basis points. We continue to generate benefits from our simplification efforts and are on track for more than $1 billion of costs out for the year.

Margins improved in six or seven businesses and our costs out momentum are strong. We remain on track for CFOA for the year. So we are running the company well. And we are executing on our portfolio strategy.

We launched the Synchrony IPO in July and as we move forward this will dramatically reduce the size of GE Capital and our presence in consumer finance and we’ve invested in platforms like Milestone Aviation, a helicopter leasing business linked to GE Aviation.

So we are on track to create a smaller GE Capital focused on commercial finance. At the same time, we announced the sale of Appliances a legacy GE business. The Synchrony spend, Appliances sale and also some acquisition from the second quarter, are all a part of repositioning GE to be the world’s best infrastructure and technology company with a smaller financial services division.

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This is a more valuable GE with 75% of our earnings from industrial by 2016. We are winning in the market. Orders were robust in the quarter growing 22% and this was driven by 31% equipment orders growth and 10% growth in services. Orders pricing was positive in the third quarter.

Technology drives high margin share and we took orders for more than a 1000 Tier-4 compliant locomotives in the quarter and are ahead of the competition. Aviation continues to enjoy a great success with LEAP wins, GEnx share growth and the GE9X launch orders.

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